M/s Air Charter Services Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 2077/DEL/2013

• Counselvise Citation: 207720114 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 09-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI ABY T. VARKEY ABY T. VARKEY ABY T. VARKEY ABY T. VARKEY, JUDICIAL , JUDICIAL , JUDICIAL , JUDICIAL MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO. .. .2077/DEL/2013 2077/DEL/2013 2077/DEL/2013 2077/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2009 2009 2009 2009- -- -10 1010 10 M/S AIR CHARTER SERVICES M/S AIR CHARTER SERVICES M/S AIR CHARTER SERVICES M/S AIR CHARTER SERVICES PVT.LTD., PVT.LTD., PVT.LTD., PVT.LTD., BMS COMPLEX, BMS COMPLEX, BMS COMPLEX, BMS COMPLEX, 10, PLAZ 10, PLAZ 10, PLAZ 10, PLAZA CINEMA BUILDING, A CINEMA BUILDING, A CINEMA BUILDING, A CINEMA BUILDING, CONNAUGHT PLACE, CONNAUGHT PLACE, CONNAUGHT PLACE, CONNAUGHT PLACE, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. PAN : AADCA2612A. PAN : AADCA2612A. PAN : AADCA2612A. PAN : AADCA2612A. VS. VS. VS. VS. DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -1(1), 1(1), 1(1), 1(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GURJIT SINGH ANAND, CA. RESPONDENT BY : SHRI S.N. BHATIA, SR.DR. ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : : : : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LEARNED CIT(A)-IV, NEW DELHI DATED 8 TH JANUARY, 2013 FOR THE AY 2009- 10. 2. IN THIS APPEAL, AS MANY AS EIGHT GROUNDS HAVE BE EN RAISED. HOWEVER, THEY ARE ALL AGAINST THE DISALLOWANCE OF ` 2,81,808/- OUT OF INSURANCE CHARGES. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D PERUSED RELEVANT MATERIAL PLACED BEFORE US. THE ASSESSEE D ERIVES INCOME FROM CHARTERING OF AIRCRAFTS. DURING THE YEAR UNDER CON SIDERATION, THE ASSESSEE OWNED THREE AIRCRAFTS AND TOTAL EXPENSES O N INSURANCE WAS CLAIMED AT ` 18,25,609/-. DURING THE YEAR UNDER CONSIDERATION, ONE AIRCRAFT WAS REFURBISHED WITH INSTALLATION OF NEW E NGINE. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE INSURANCE IN RE SPECT OF THIS AIRCRAFT ITA-2077/DEL/2013 2 WAS A CAPITAL EXPENDITURE. ACCORDINGLY, HE TREATED THE INSURANCE OF ` 4,69,680/- PAID IN RESPECT OF THE SAID AIRCRAFT AS CAPITAL EXPENDITURE AND ALLOWED 40% DEPRECIATION THEREON. ACCORDINGLY, NET ADDITION OF ` 2,81,808/- WAS MADE. AFTER CONSIDERING THE ARGUMEN TS OF BOTH THE SIDES AND THE FACTS OF THE CASE, IN OUR OPINION, TH E INSURANCE PAYMENT IN RESPECT OF THE AIRCRAFT WHICH IS OWNED BY THE AS SESSEE AND BEING USED FOR THE PURPOSE OF BUSINESS CANNOT BE TREATED AS CAPITAL EXPENDITURE MERELY BECAUSE SUCH AIRCRAFT WAS REFURB ISHED WITH INSTALLATION OF NEW ENGINE. WE, THEREFORE, DIRECT THE ASSESSING OFFICER TO ALLOW THE INSURANCE ON SUCH AIRCRAFT ALSO AS REV ENUE EXPENDITURE AND CONSEQUENTIALLY, WITHDRAW THE DEPRECIATION ALLO WED THEREON. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 5 TH SEPTEMBER, 2014. SD/- SD/- ( (( (ABY T. VARKEY ABY T. VARKEY ABY T. VARKEY ABY T. VARKEY) )) ) (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL) )) ) JUDICIAL MEM JUDICIAL MEM JUDICIAL MEM JUDICIAL MEMBER BER BER BER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 05.09.2014 VK. COPY FORWARDED TO: - 1. APPELLANT : M/S AIR CHARTER SERVICES PVT.LTD ., M/S AIR CHARTER SERVICES PVT.LTD., M/S AIR CHARTER SERVICES PVT.LTD., M/S AIR CHARTER SERVICES PVT.LTD., BMS COMPLEX, 10, PLAZA CINEMA BUILDING, BMS COMPLEX, 10, PLAZA CINEMA BUILDING, BMS COMPLEX, 10, PLAZA CINEMA BUILDING, BMS COMPLEX, 10, PLAZA CINEMA BUILDING, CONNAUGHT PLACE, NEW DELHI CONNAUGHT PLACE, NEW DELHI CONNAUGHT PLACE, NEW DELHI CONNAUGHT PLACE, NEW DELHI 110 001. 110 001. 110 001. 110 001. 2. RESPONDENT : DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, CIRCL CIRCL CIRCL CIRCLE EE E- -- -1(1), NEW DELHI. 1(1), NEW DELHI. 1(1), NEW DELHI. 1(1), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR